Natural gas prices soared to a new record high Monday as a blizzard socked
the Midwest and forecasts predicted bitter cold for at least the next few days.

The soaring prices could almost immediately show up as unwelcome increases in
consumers' winter heating bills, analysts said.

Natural gas futures rose as much as 13 percent, hitting a high of $9.65 per
1,000 cubic feet in regular trading on the New York Mercantile Exchange after
surging as high as $9.86 in electronic trading overnight. January natural gas
finished up 82.9 cents to $9.41 per 1,000 cubic feet.

Phil Flynn, vice president and senior energy analyst at Alaron Trading Corp.
in Chicago, said a storm that was expected to dump up to a foot of snow on
Chicago raised fears that utilities may not have enough natural gas stored up to
get through a harsh winter. Natural gas heats 90 percent of the homes in
Chicago, he said.

Cold weather in the Pacific Northwest has also contributed to the rise in
prices, he said.

"It's more of a psychological situation than a real situation right
now," Flynn said. "I would expect that the first big break in the
weather will bring a break in the market."

Another factor in Monday's gains was federal regulators' approval Friday of
plans to lift price caps on wholesale California electricity to ease that
state's power crunch, Flynn said. The order means the $250 per megawatt hour
limit for wholesale electricity can be exceeded if the sellers can justify the
costs.

Natural gas, once thought of mainly as a source for winter heating, has
become a year-round fuel used to generate the electricity that powers air
conditioners and computers. But that rise in use has not been accompanied by an
equal growth in capacity, meaning the resource is in short supply.

Weekly data released Wednesday by the American Gas Association showed a draw
of 73 billion cubic feet from U.S. inventories of natural gas. The decline was
not as severe as some traders had feared but still has been driving prices
higher because supplies are considerably lower than year-ago levels.

Bill O'Grady, director of futures research at A.G. Edwards and Sons in St.
Louis, said the timing of Monday's snowstorm--early December--has utilities
concerned about shoring up their inventories.

"Inventories aren't the tightest on record, but they're tight,"
O'Grady said. "The market is essentially auctioning off the last molecules
of supply to the highest bidder."

O'Grady and Flynn said consumers should be prepared for utilities to pass
along the higher natural gas prices in their heating bills this winter.

In other trading at the New York Mercantile Exchange, January Crude Oil
raised $1.06 to $29.50 per barrel, January unleaded gasoline was up 2.88 to
76.54 cents a gallon and heating oil for January delivery rose 3.85 cents a
gallon.

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